Avago Technologies Plans $5.1 Billion of Loans for LSI Purchase

Avago Technologies Ltd. (AVGO), a Singapore-based chip manufacturer, is planning $5.1 billion of loans to back its purchase of LSI Corp. (LSI)

A group of banks have underwritten $4.6 billion of seven-year term loans with a variable, blended interest rate of about 3.5 percent, according to a regulatory filing today. Avago will also receive a $500 million revolving credit line that will be undrawn, the filing shows.

Avago, which was founded in 1961 as an electronics division of Hewlett-Packard Co., agreed to acquire San Jose, California-based LSI for $6.6 billion. The deal will also be financed with a $1 billion investment from Silver Lake Partners and $1 billion of cash, according to the regulatory filing.

Silver Lake, the private-equity firm that helped acquire Avago before the company’s initial public offering in 2009, will provide $1 billion of 2 percent senior unsecured notes that are convertible at $48.04 per share, or preferred stock with equivalent economic terms, the filing shows.

Silver Lake and KKR & Co. were among a group of buyout firms that acquired the business for $2.66 billion in 2005 and took it public in 2009.

Under a revolver, money can be borrowed again once it’s repaid; in a term loan, it can’t.

To contact the reporter on this story: Christine Idzelis in New York at cidzelis@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.